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Macroeconomics

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Moderate

Transactions Model of Money Demand

MACRO-WEK6X4

In a transactions model of money demand (like the Baumol-Tobin model), an increase in the fixed cost of account transfers causes

A

the frequency of transfers from non-money to money accounts to rise.

B

the average value of money holdings to rise.

C

the velocity of money to rise.

D

the average value on non-money holdings to rise.